Congress can boost Colorado jobs

Given the lingering effects of the Great Recession, lawmakers in Washington should be doing everything they can to accelerate economic growth and job creation. At a minimum, they should do no harm to prospects for growth.

A good first step would be to remove a Cold War-era anti-trade policy that is about to start impacting companies that want to export more goods and services to Russia’s large and growing economy.

Make no mistake, exports help drive Colorado’s economy. Nearly 4,500 state-based companies exported $7.3 billion worth of goods last year, with exports accounting for tens of thousands of the state’s private-sector jobs, according to the International Trade Administration. Almost a quarter of Colorado’s manufacturing jobs depend on exports, and most of them are with small- and medium-sized firms — the very sort of businesses most likely to create new jobs.

Right now, Russia is especially important for U.S. trade is because later this summer, the country will become a full member of the World Trade Organization, the global body that ensures free and open trade among its member nations. In order to join, members have to keep tariff rates low and fair and protect intellectual property rights.

To gain accession to the WTO, Russia agreed to cut a third of its tariffs immediately and lower most of its other tariffs within three years. As a result, manufacturers exporting to Russia will face a 7 percent tariff, instead of the current 10 percent. Chemical companies will pay just 5.3 percent, instead of duties that can reach 20 percent today. And IT companies won’t get hit with any tariff at all.

As a result, countries around the world will have greater access to Russia’s 142 million consumers, a growing market that ranks as the world’s ninth largest. According to some estimates, this could result in a doubling of U.S. exports to $22 billion within five years.

And it means more opportunities for Colorado companies, which already export $65 million worth of products annually to Russia.

But this potential for growth in exports could quickly vanish, and indeed current export levels could quickly decline, unless Congress acts to grant Russia “permanent normal trade relations” (PNTR) status — something Congress has already approved for other WTO members, including China.

To do so, Congress must overturn the Jackson-Vanik amendment to the Trade Act of 1974, a measure designed to pressure the old Soviet Union into improving its emigration policies. The thinking then was that trade restrictions would encourage the Soviet Union to let dissidents and persecuted religious groups leave the country.

But, of course, the Soviet Union has been defunct since 1991. And Russia has been in full compliance with the terms of the Jackson-Vanik amendment since 1992. It’s time for Congress to take notice.

The problem is that if Russia doesn’t get PNTR status, the U.S. will be in violation of the very WTO rules we agreed to (and in fact played a lead role in writing). That means the U.S., and the U.S. alone, will fail to realize the full benefits of Russia’s lower tariffs and more open markets.

That will put companies currently doing business in Russia, along with those hoping to break into that market, at a serious competitive disadvantage, since their foreign competitors will enjoy all these benefits.

That’s why an array of jobs-boosting business groups — including the Business Roundtable, the U.S. Chamber of Commerce, the American Farm Bureau Federation, the American Council of Life Insurers and the Coalition of Service Industries — have made it a top priority to try to persuade Congress to repeal the Jackson-Vanik amendment immediately.

Unfortunately, there are some in Congress who want to keep Jackson-Vanik, under the misguided assumption that it will help pressure the Russian government on civil rights reforms or to be more cooperative on foreign policy matters.

Russia is not a perfect country, and the Russian people face major challenges ahead in reforming their political system. But people leading the Russian democracy efforts have said getting rid of Jackson-Vanik will help their cause.

There are better ways to encourage reform in Russia than by needlessly hurting companies in Colorado, and throughout the United States. Congress must act quickly to repeal Jackson-Vanik, and establish PNTR with Russia lest American companies fall further behind in the vast Russian market.
Kelly J. Brough is president and CEO of the Denver Metro Chamber of Commerce. Tom Clark is CEO of the Metro Denver Economic Development Corporation.

Vincent Carroll is The Denver Post's editorial page editor. He has been writing commentary on politics and public policy in Colorado since 1982 and was originally with the Rocky Mountain News, where he was also editor of the editorial pages until that newspaper gave up the ghost in 2009.

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